Blog Post

Tech giants to feds: We need free trade for data

Google(s goog), IBM(s ibm), Citi (s c) and a handful of other large U.S. technology and banking companies are pushing the U.S. government to take the lead on establishing global treaties that would assure the free flow of information across international borders. If the government is smart, it will listen. These companies are certainly looking out for their own best interests, but, in this case, their interests also align very closely with national economic interests.

The companies — which also include MasterCard(s ma), Visa(s v), Microsoft(s msft), Oracle(s orcl), Salesforce.com(s crm) and GoDaddy — signed on and contributed to a set of principles called “Promoting Cross?Border Data Flows: Priorities for the Business Community.” Written under the leadership of the National Foreign Trade Council, the document lays out the case for establishing agreements that would both prohibit the blocking of otherwise-legal data housed on foreign servers (e.g., Twitter, Facebook or YouTube) and address some of the country-specific laws, including around data protection, that make it very difficult for a company to do business in a given country without having a physical presence in that country. All told, the policy paper calls for the U.S. government to “seek international commitments on [seven] key objectives”:

Ensure that trade agreements cover digital services that may be developed in the future.

While many industries are suffering in the United States, the Internet technology and financial services sectors are not among them. They’re making lots of money and (many of them are) doing lots of hiring, all of which means more tax revenue for the United States. But the fact that they can’t operate unrestrained in some countries because of government censorship, or that laws prohibiting the transfer of data outside national boundaries require heavy capital and operational expenses in numerous countries, certainly isn’t helping business.

This collective is in good company

Indeed, this collection of companies and special-interest groups isn’t the first to call upon the U.S. government to address these problems. In June, a group of experts took part in a Brookings Institute panel to discuss a proposed piece of legislation called the Cloud Computing Act of 2011, which itself puts a priority on establishing international agreements around how data is both legislated and litigated. As I wrote at the time:

The concept of determining which country has jurisdiction in litigation involving foreign parties and international business activity is handled differently in nearly every country, which makes litigation complex. That has now been exacerbated by the advent of the Internet and globally distributed servers. … [And] the cloud’s inherent benefits of scalability and flexibility are hamstrung when they’re bounded by national borders, and there are many countries where no cloud infrastructure exists and likely never will. Users in these countries still need freedom to access cloud computing resources with a certain degree of legal certainty.

In July, the TechAmerica Foundation’s CLOUD2 commission — which includes among its membership a who’s who of major IT executives — released a report highlighting how it thinks the U.S. government should go about encouraging the growth of cloud computing. Wisely, it noted how even current U.S. laws actually have a stifling effect on transnational data flows:

[T]he Commission suggests three steps to increase clarity around the rules and processes cloud users and providers should follow in an international environment. … (1) modernize legislation (the Electronic Communications Privacy Act) governing law enforcement access to digital information in light of advances in IT; (2) study the impact of the USA PATRIOT Act and similar national security laws in other countries on companies’ ability to deploy cloud in a global marketplace; and (3) have the U.S. government take the lead on entering into active dialogues with other nations on processes for legitimate government access to data stored in the cloud and processes for resolving conflicting laws regarding data.

Pessimists would point out that any cause with this much big-business backing has to result in government action (see, for example, the proposed E-PARASITE Act). They might hope that’s true in this case, because while the United States lets the rest of the world fill its shelves with cheap imports in the name of globalization, information technology is one of the few things it has left to export. But with a hodgepodge of laws regulating the digital economy internationally, U.S. companies are sometimes left paying a high price to go global, even when the medium of the Internet should make it so easy to do so.

3 Responses to “Tech giants to feds: We need free trade for data”

Precious few, from what I can see, for the companies involved — they’d get to serve customers in other countries and carry out other transactions with far fewer burdens. The issues would be for the EU, for example, which has strict data privacy laws, and countries with laws in place to censor or benefit local companies.

The Obama administration has gone in the opposite direction lately, trying to make international “anti-free trade” treaties, like ACTA, which forces all the other countries to use USA’s more strict copyright laws.